The U.S. economy contracted at a slower-than-expected pace in the second quarteraccording to the GDP data on Friday, but a sharp drop in consumer spending fanned fears that recovery would be sluggish. Economists Dick Berner at Morgan Stanley and Robert Barbera of ITG told investors what to expect for the following quarter.
“The [GDP] number tells us very little about what’s happening in the third quarter,” Berner told CNBC.
Berner said the ‘Cash-for-Clunkers’ program is going to add to the sales picture for the third quarter.
“What we know about the third quarter is that we’re going to get a significant boost from what’s going on in motor vehicles and likely to see some other things contribute to third-quarter growth. So we think there’s a potential for significant improvement in third-quarter growth. But the key issue is whether that will be sustainable going forth.”
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Barbera, on the other hand, said the GDP report sets the economy up for a “pretty snappy” couple of quarters.
“You’re going to have a big snap back both in inventory and residential,” said Barbera. “The recession was much deeper than what was initially advertised. This sets you up for a better rebound in the second half of the year.”
Barbera expects a 3.5 GDP level in the second half of the year, based on the last 18 months.
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No immediate information was available for Berner or Barbera.
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